Retiring To Medellin Or Panama City?

The Gloves Are Off—Panama City And Medellin Toe-To-Toe

The best way to approach the challenge of deciding where in the world might be the best place for you to live or retire overseas is comparatively. Nowhere is perfect, and nothing is absolutely true. Everything is relative.

Take Medellin, Colombia, and Panama City, Panama, for example, two of the best places on earth to think about spending your time or your money right now. While each is a top live-, retire-, invest-overseas choice, these two cities couldn’t be more unalike. In many ways, you could say that these two choices are the retirement haven yin and yang of each other.

Arriving in Panama City, you recognize instantly that this town is open for business, pushing for growth, and both embracing and chasing prosperity. Your heart rate quickens, and your mind works quicker, too, trying to keep up with the commotion all around.
Arriving in Medellin has the opposite physical effects. Your heart slows a bit, your mind settles.

Unlike Panama City, Medellin’s cityscape isn’t all high-rise condo towers and features nary a single building of glass or steel. From any height (the windows of one of the city’s luxury penthouse apartments for example, or the top of one of the surrounding hills), Medellin appears a sea of red clay tiles and red brick buildings interspersed regularly by patches of foliage and flowers. The effect, again, is calming, peaceful.

You can learn a lot about a place both from and by its taxi drivers. They’re a top source of getting-to-know-a-city information and insights, of course, but they’re also a barometer of the mood of a place. In Panama City, taxi drivers are in a hurry. They honk their horns constantly. They weave in and out of traffic, from lane to lane, pushing for constant progress. They can’t abide sitting still or even slowing down. They run traffic lights and ignore “Stop” signs. They also tend to be unhelpful, even rude. A Panamanian friend describes them as “among the least appealing people on earth.” I can think of a handful of exceptions, but, in general, I’d agree with my friend.

In Medellin, the taxi drivers, like their city, are gentler and calmer, happy to stop to offer directions or even to chat. In Medellin, you rarely hear the honking of a car horn, not by a taxi driver and not by anyone else either. It’s also worth noting that, in Medellin, taxis are not only ever-present, but also always painted yellow and metered, unlike in many of the places where we recommend you spend time. Again, orderly…genteel.

Medellin is impressively green, with trees, plants, and small gardens everywhere, and remarkably clean. In the central neighborhoods, you see no litter. The metro, a point of pride for the local population, is spotless and like new. At every station and in every train we’ve ever ridden, I’ve looked for but have been unable to find even a cigarette butt or piece of gum on the ground.

Panama is working hard to clean up and green up its capital city. The long stretch of parkland along the bay known as the Cinta Costera has dramatically changed the face of Panama City for the better (and is being expanded). Still, while one might describe Medellin as genteel, an appropriate adjective for Panama City might be gritty.

Walking around Medellin, especially outside the central tourist zone, Lief and I feel like an anomaly. This is less and less true, as Medellin becomes more discovered by expats and retirees. However, in Panama City, Americans are everywhere. We have been part of the landscape in this city for a hundred years.

From a cost of living perspective, I’d put these two cities on par…depending on the relative strength of the Colombian peso. Right now, the U.S. dollar is at the upper end of the range it’s traded in versus the peso over the past five years. We watch this, looking for opportunities to change dollars into pesos to cover carrying costs for our apartment in Medellin. (Right now, for example, would be a good time to make a dollar-peso exchange if that’s an agenda for you.)

In Panama, where US$1 is US$1, this isn’t an issue. The American in Panama has no exchange-rate risk to worry about. If you intend to retire on an income fixed in dollars, this can be an important plus.

Both markets offer interesting real estate investment opportunities. The real estate market in Panama City, after settling post-2008, has begun to appreciate again. Today, you can buy the best this market has to offer for US$1,500 to US$2,200 per square meter. A year from now, this will not be the case. Central Panama City values are going to move up steadily from here for the next few years.

In Medellin, meantime, you can buy in El Poblado, considered the best address in the city, for as little as US$1,200 per square meter (resale). In less central, more local neighborhoods, you can buy for less. The real estate market in Medellin reminds me of the market in Panama City when we first began paying attention to it about a dozen years ago.

Panama is one of the world’s most welcoming countries when it comes to establishing residency. In Panama, the would-be expat, retiree, or entrepreneur has more than a dozen options for how to establish full-time residency, including the new “Friends of Panama” visa option, which amounts not only to the most user-friendly, turn-key residency option in the world today but also the most user-friendly, turn-key residency option in the history of residency options. Plus, it can lead to a work permit, which is a big deal.

Colombia, too, though, offers good foreign residency options, including one for pensioners and another for investors. The minimum investment requirement in each case can be less than for comparable options in Panama.

One practical matter that is not as straightforward in Colombia as it is in Panama is opening a bank account. It’s not possible as a foreigner to open a local bank account in Colombia unless you have a personal introduction to the bank. If someone tells you otherwise, they’re speaking optimistically and not from real-world experience.

The alternative is to open an account with what’s called a “fiduciary,” the local equivalent of Charles Schwab. Unlike opening a bank account, this is relatively straightforward and a reasonable strategy for dealing with local bills. The downside is that transaction fees can be high.

The other downside to Medellin compared with Panama City is that few in Medellin speak English, whereas, in Panama City, it’s possible to get by speaking no Spanish.

In addition, Medellin (again, very unlike Panama) is not a tax haven, and taxes are high. Living here, your tax burden could increase, depending on your nationality, where you hold legal residency, and where your income comes from. The country even imposes a wealth tax (after five years of residency). Note, though, that moving to Colombia with only retirement income should be a tax-neutral event. Colombia, like most countries, doesn’t tax foreign retirement income.

Unlike Panama, Colombia imposes exchange controls. These are manageable if you plan and execute any investment in the country carefully and correctly. But, again, they’re not an issue at all in Panama.

Bottom line, here’s how I’d break all this down…

Panama City Versus Medellin:

Cost Of Living: It’s a tie, more or less, depending on the relative strength of the Colombian peso…

Cost Of Real Estate: As much as 50% less expensive in Medellin…

Climate: Way more comfortable in Medellin…

Quality Of Life: This is completely subjective and impossible to pin down. Nevertheless, I’ll go out on a limb and say that the overall quality of life is more appealing in Medellin than in Panama City…

Ease Of Residency: Panama is one of the easiest places in the world for a foreigner to establish full-time legal residency, especially if he comes from one of the countries included in the new “Friends of Panama” visa program. However, Colombia is also a very straightforward option in this regard. Certainly, I wouldn’t take Colombia off my list for fear of a complicated struggle related to becoming a resident…

Ease Of Banking And Doing Business: Here, Panama wins hands down, with its international banking industry (the exchange-of-information treaty the country signed with the United States in 2010 notwithstanding); its lack of any exchange controls; the absence in this market of any currency exchange risk (as Panama uses the U.S. dollar as its currency); and its greater prevalence of English-language speakers…

Infrastructure And Accessibility: Another tie…

Taxes: Panama is the screaming champion on this score, a true tax haven, while Colombia qualifies as a high-tax jurisdiction, with, for example, a corporate tax rate as high as 33%. Again, though, if you’re a retiree making a move with retirement income, you probably don’t have to care about this…

Health Care: Top notch on an international scale in both cities…

Ease Of Settling In: Panama City is a kind of halfway house for expats, a very easy and comfortable first step overseas. Medellin is more an emerging expat destination, though it is more discovered and therefore easier to navigate as an expat or foreign retiree all the time…

Which city might be better for you?

I couldn’t say. As I remind you often, it depends on your personal circumstances, your priorities, and your preferences. What is your current situation and what kind of experience are you looking for?

I can tell you that we’ve decided not to try to choose but, instead, have worked over the past few years to incorporate Medellin into our long-term retire-overseas plan.

As a friend in Medellin, another expat who also divides his time between that city and Panama City, put it recently: “Do business in Panama but live in Medellin. That’s the ticket…”

About Author

Kathleen Peddicord is the founder of the Live and Invest Overseas
publishing group. With 30 years of experience covering this beat, Kathleen reports daily on current
opportunities for living, retiring and investing overseas in her daily e-letter. Her newest book, "How To Buy Real
Estate Overseas," published by Wiley & Sons, is the culmination of decades of personal experience living and
investing around the world.